Title: Canadian Dollar Short-Term Forecast: USD/CAD Faces Rejection at Resistance as Market Awaits Key Economic Data
By Matt Weller, originally published on Forex.com
The Canadian dollar (CAD) continues to find strength against the US dollar (USD), with USD/CAD facing rejection from a key resistance zone in early November 2025. This development hints at a potential near-term shift in sentiment and market direction, as traders begin to reassess both Canadian and US economic fundamentals and monetary policy outlooks. Analysis of USD/CAD price action, recent macroeconomic data, and central bank dynamics suggest traders should tread carefully in the coming days.
In this article, we analyze key drivers of USD/CAD performance, recent technical developments, and critical upcoming data releases that could reshape the currency pair’s trajectory into the remainder of November and beyond.
Key Takeaways:
– USD/CAD has been rejected from 1.3800 resistance, signaling potential for downside momentum.
– Strong Canadian employment data in October has bolstered investor confidence in the loonie.
– A weakening greenback, in part due to softening US economic indicators, puts pressure on the USD/CAD pair.
– Bank of Canada (BoC) and Federal Reserve monetary policy stances are starting to diverge subtly, adding fuel to the loonie’s recent surge.
– Oil price movements, a major driver of the Canadian dollar, remain a wildcard in influencing CAD strength.
Technical Overview: USD/CAD Falls from Resistance
At the start of November 2025, the USD/CAD currency pair approached the significant psychological and technical resistance level around 1.3800. This price level had acted as a ceiling several times throughout October, and once again proved too strong to breach. A firm rejection at resistance on November 8 was followed by a retracement back toward the 1.3700 and 1.3650 support zones.
Key technical observations:
– A bearish rejection at 1.3800 suggests market hesitation and a potential pivot lower.
– Momentum indicators, including the Relative Strength Index (RSI), have turned downward, indicating declining buying pressure.
– The price remains above its 200-day moving average, suggesting longer-term bullish bias remains intact, though short-term pullbacks are likely.
– A break below 1.3600 would mark a more significant shift, potentially opening the door to further declines toward the 1.3400 support region.
Short-term traders are now watching for confirmation of a reversal pattern and gauging whether this rejection at resistance could lead to a deeper correction or simply a temporary pause in the broader uptrend.
Fundamental Drivers of the Canadian Dollar
1. Strong Canadian Labor Market
One of the key catalysts for CAD strength this month has been better-than-expected employment data. Statistics Canada reported that:
– The Canadian economy added 45,000 jobs in October, beating market expectations of 12,000.
– The unemployment rate held steady at 5.5 percent, defying forecasts of a slight uptick.
– Wage growth continued to accelerate, with average hourly wages increasing by 5.2 percent year-over-year.
This strong labor data bolsters confidence in the Canadian economy and makes the Bank of Canada’s decision to hold rates steady seem more warranted. Although the BoC has signaled it is nearing the end of its tightening cycle, market expectations for cuts remain muted compared to those for the US Federal Reserve.
2. Crude Oil Prices and the CAD Connection
As a major oil exporter, the Canadian dollar is heavily influenced by moves in the oil market. The recent uptick in crude prices—WTI crude futures are hovering near $86 per barrel—has lent additional support to the loonie.
Oil prices have been buoyed by:
– Concerns over Middle East geopolitical tensions, particularly in Israel and surrounding countries, potentially disrupting oil supplies.
– OPEC+ production cuts continuing through late 2025, tightening global supply.
– Resilient global
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